Continental Butchery Limited v Nthiwa [1978] KECA 28 (KLR)
The bottom line
#A Kenya Court of Appeal ruled a creditor can win quickly on part of a debt while a genuinely disputed part must go to trial.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the learned judge erred in granting unconditional leave to defend the application for summary judgment under order 35
- 2.Whether the respondent received the sums of shs 10,000/- and shs 66,000/- as money lent and advanced
- 3.Whether the affidavit of Mr Shako, which verified a cause of action in a non-existent amended plaint, could support the application for summary judgment
- 4.Whether the learned judge took into account immaterial and extraneous facts
Key legal issues
#Effect of an affidavit verifying a non-existent pleading on a summary judgment application
Such an affidavit is valueless and deprives the court of jurisdiction to entertain the summary judgment application, though the court may proceed if the defect is assumed cured.
Madan JA held that an affidavit referring to an amended plaint that was never filed cannot support the application; the two pleadings are different documents and no attempt was made to correct the defect. Strictly this alone justified dismissal, but the court proceeded on the assumption that leave to file a supplementary affidavit had been granted, since contents of an affidavit may only be changed by a further sworn statement.
Whether the shs 66,000/- cheque constituted money lent and advanced to the respondent
Yes; by endorsing the cheque in favour of the company, the respondent received the money to his use and cannot deny receipt of the loan.
The respondent, as payee and owner of the cheque, endorsed it so that its proceeds went to the company, which allotted him shares. His endorsement was a receipt for payment to him. Even if the company had failed to allot shares or account for the money, he would still be held to have received the shs 66,000/- so far as the appellant is concerned. All three judges agreed on this point.
Whether the shs 10,000/- cheque raised a triable issue
Yes, by the majority (Wambuzi and Law JJ A); the possibility that the appellant financed the goodwill payment made it a bona fide defence entitling unconditional leave.
Madan JA would have held the goodwill issue incapable of creating a triable issue between these parties, since any goodwill claim lay between the company and the respondent. However, Wambuzi JA and Law JA considered the transaction's involvement meant an arrangement whereby the appellant paid its proportion of the goodwill was understandable and probable, disclosing a bona fide ground of defence. The majority view prevailed on this item.
Nature of the summary judgment procedure under order 35
Order 35 exists to give plaintiffs with liquidated claims quick judgment and to prevent sham defences defeating rights by delay; conditional leave is available where appropriate.
The court traced the purpose of the summary procedure through Anglo-Italian Bank v Wells, Jacobs v Booths Distillery Company and Zola v Ralli Brothers, holding that a defendant raising a sham defence should not be permitted to litigate, but that Kenyan courts should give conditional leave where the circumstances call for it, notwithstanding doubts about Jacobs v Booths as an authority against conditional leave.
Legal principles established
#- Where a bona fide triable issue is raised the defendant must be given unconditional leave to defend; sham defences do not entitle a defendant to leave.
- Conditional leave to defend is available in Kenya where the circumstances call for it, notwithstanding doubts expressed elsewhere about Jacobs v Booths Distillery Company.
- An affidavit verifying a cause of action in a non-existent pleading cannot support an application for summary judgment.
- On a summary judgment application, all pleadings, affidavits and relevant circumstances are proper material for consideration.
- A payee who endorses a cheque and directs its proceeds to a third party is held to have received the money to his use.
Court orders
#- 1.The order of the learned judge granting unconditional leave to defend is set aside
- 2.Unconditional leave to defend is granted in respect of the cheque for shs 10,000/-
- 3.Conditional leave to defend is granted in respect of the sum of shs 66,000/-, subject to the respondent depositing shs 66,000/- in court within thirty days
- 4.In default of the deposit, the appellant may sign judgment only for shs 66,000/- with interest thereon and costs of the application for summary judgment
- 5.Costs of the application for summary judgment to be in the cause
- 6.The respondent must pay the appellant's costs of this appeal
The bench
#Judges wrote separately. A dissent does not bind; a concurrence may narrow the ratio.
Wrote the judgment
Wrote the leading judgment analysing order 35 summary judgment procedure, holding the respondent received the full shs 76,000/- and would have granted only conditional leave, but deferring on the shs 10,000/- cheque to the views of Wambuzi and Law JJ A, who favoured unconditional leave on that item.
However as both Wambuzi JA and Law JA are of the opinion that unconditional leave to defend should be given in regard to the cheque for shs 10,000/-, it is so ordered.p. 5
Wrote the judgment
Agreed the respondent received the shs 66,000/- cheque proceeds and that conditional leave was appropriate, but differed on the shs 10,000/- goodwill cheque, holding it a triable issue meriting unconditional leave to defend.
I would accordingly have given unconditional leave to the respondent to defend in respect of the shs 10,000/-. Subject to that I concur in the orders proposed by Madan JA.p. 6
Wrote the judgment
Agreed that conditional leave to defend was appropriate for the shs 66,000/- cheque, but found a bona fide defence regarding the shs 10,000/- goodwill payment, favouring unconditional leave on that sum.
In my opinion, a bona fide ground of defence was shown to exist in this respect.p. 6
- On appeal from
- High Court of Kenya, Nairobi
- Civil Case No 569 of 1977
- Jurisdiction invoked
- Appeal against an interlocutory order of the High Court refusing summary judgment under Order 35 of the Civil Procedure (Revised) Rules, 1948
Relief refused
#Entry of summary judgment for the full amount of shs 76,000/-
The court granted leave to defend rather than final summary judgment: conditional leave as to shs 66,000/- and unconditional leave as to shs 10,000/-
Costs
The respondent must pay the appellant's costs of this appeal; costs of the application for summary judgment will be in the cause.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
I would therefore set aside the order made by the learned judge and substitute therefor an order that the respondent is given conditional leave to defend subject to his depositing in court shs 76,000/- within thirty days and costs of the application for summary judgment will be in the cause.
As regards the sum of shs 66,000/- the respondent is given conditional leave to defend upon the terms stated by me save that in case of default by the respondent in depositing this sum in court, the appellant will be at liberty to sign judgment only for the sum of shs 66,000/- with interest thereon and costs.
If a bona fide triable issue is raised the defendant must be given unconditional leave to defend but not so in a case in which the court feels justified in thinking that the defences raised are a sham.
In my opinion in Kenya there should be no hesitation in giving only conditional leave to defend if the circumstances so call for.
An affidavit which purports to verify the cause of action in a non-existent amended plaint, is quite valueless to support an application for summary judgment under order 35 in respect of a cause of action pleaded in a plaint.
Nothing is immaterial which helps justice to be done. Nothing is extraneous which helps to prevent injustice being done.
The respondent must pay the appellant’s costs of this appeal.
Issues in the judgment
#The opening of the judgment states the appeal is against an order of refusal to enter summary judgment, but the judgment below in fact granted unconditional leave to defend; the order set aside was a grant of leave, not a refusal.
The judgment contains a typo in a quoted case name: 'Anglo – Italian Bank v Wells'
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Continental Butchery Limited v Nthiwa [1978] KECA 28 (KLR)", Case Analysis (1978). Civil Appeal from Nairobi High Court Civil Case No 569 of 1977. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1978/28/eng@1978-01-31
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.